Amazon.com is considering open to three thousand new stores AmazonGo in the coming years, according to people familiar with the subject.
This would be an aggressive and expensive expansion that would threaten convenience chains, such as 7-Eleven, as well as Subway and Panera Bread, as well as pizzeria & # 39; s and food trucks.
The CEO of the company, Jeff Bezos, sees the elimination of food congestion in the busiest cities as the best way for Amazon to re-invent the physical shopping experience, where most expenses are still taking place. But it is still experimenting with the best format: a supermarket that sells freshly prepared food, a limited grocery selection similar to the 7-Eleven franchises, or a place just to eat something quickly for people in a hurry, similar to the British chain Pret a Manger, said one of the sources.
An Amazon spokeswoman declined to comment on the case. The company introduced its first such store near its headquarters in Seattle in 2016 and has since announced two additional locations, one in Seattle and the other in Chicago. Two of the new stores offer only a limited selection of salads, sandwiches and snacks, which shows that Amazon is experimenting with the concept, simply as a meal option in the race. Two other stores, including the original AmazonGo, also have a small selection of groceries, making it more like a supermarket.
Buyers use an application smartphone to enter the store, and once they scan their phones on a turnstile, they can take what they want from a variety of salads, sandwiches, drinks and snacks, and then leave without stopping at a checkout. Sensors and computer vision technology detect what buyers do and invoice them automatically, so they do not have to pay.
The challenge for Amazon's plan is the high cost of opening each location. The original AmazonGo in downtown Seattle alone required hardware worth more than $ 1 million, according to a person familiar with the issue. By limiting the focus to ready-to-eat food, the initial costs for opening each store would be lower, because fewer cameras and sensors would be needed. Prepared foods also have wider profit margins than edible, which would help to make the time needed for stores profitable.
News about the potential ambitions of the company for AmazonGo have reduced the actions of supermarkets and retailers. Walmart Inc. decreased by 0.6 percent, reversing a previous gain, while Target Corp dropped by 1.5 percent and Kroger Co. 3.1 percent lower.
Amazon has become the largest online retailer in the world by offering a wide selection and fast and convenient delivery. In physical stores Amazon emphasizes the ease of selection to win business. The other traditional initiatives of Amazon include about 20 bookshops in the United States and the chain of natural supermarket Whole Foods Market, which was acquired last year. AmazonGo is the most distinctive of all physical stores.
At an event in Washington DC last week, Bezos said that Amazon was "very interested" in physical stores, but only if it has something new to offer. "If we also offer a product ourselves, it will not work," he said.
Such an expansion can bring Amazon back to an investment cycle. Bezos is willing to lose money in it long-term initiatives if you smell the chance Amazon Web ServicesThe company's fast-growing and profitable cloud computing activities had not been profitable for years and Bezos hid it, according to a person familiar with the subject. Amazon also loses money routinely by expanding internationally.
add 3000 convenience stores would convert to AmazonGo in one of the largest chains in the United States. The internet giant is considering plans to open around 10 locations by the end of this year, about 50 locations in major urban areas in 2019 and 3 millennia in 2021, said the people who wanted anonymous because they could not discuss the internal plans. The opening of various locations in the neighborhood, such as in Seattle, can also help Amazon reduce costs by centralizing food production in a kitchen that is suitable for many stores.
The United States currently has 155,000 convenience stores, with 122 thousand 500 of them combined with petrol stations, according to the NACS industry group. Non-fuel purchases at convenience stores amounted to 233 billion in 2016, with cigarettes and other tobacco products being the best-selling items.
Amazon focuses on dense urban areas with many young, busy and wealthy residents who are willing to spend a little more to get better quality food, according to the sources. Locations make these stores less threatening to petrol stations in the suburbs, but more for fast service restaurants in big cities such as Subway Restaurants, Panera Bread and Pret a Manger. Fun, based in the UK, has 450 locations around the world, including New York, Boston and Chicago, and focuses on fresh and healthy takeaways.
AmazonGo will be more of a threat to informal fast restaurants when it comes to cities, said Jeff Lenard, NACS vice president. Buyers rate the location and lack of rules as the main factors when buying for convenience, he said.
"AmazonGo has no lines," Lenard said. "The key to success will be the convenient locations – if they are a quarter of a mile away from where people walk and cycle, the novelty of technology will not matter, it's too far away."